Band of brothers: the story behind the South Louisiana Rail Facility

Early December has brought cold and rainy weather to southwest Louisiana. Farmer Mark Pousson has just finished supervising the loading of a string of railcars and is now heading to spend some much-deserved downtime at hunting camp. In a few hours, while Pousson’s dogs run deer, the train will pull out of the Lacassine Industrial Park and, with its cargo of rough rice, head south to Mexico.

How did this come about?

“About five years ago, a handful of rice farmers were sitting around a table with few options,” explains Pousson. “We couldn’t shift our rice and couldn’t even get a price. We had notes to pay, equipment, land rent, whatnot. So, we were stuck and looking for solutions.”

Far removed from Mississippi River barge traffic, the men “had to make something happen. We started looking around. Would a barge facility work? What was the situation with the port of Lake Charles?”

The solution was right under their noses. The industrial park – about a 20-minute drive east from Lake Charles -- was waiting to service growers in Jeff Davis and Acadia parishes, the top rice-producing parishes in Louisiana. The park included a huge, shuttered sugar factory that had left behind two rail spurs and truck scales.

“Basically, we set up around five meetings where the area farmers could find out what we were trying to do,” says producer Chris Krielow, speaking after setting his cattle up to weather the cold snap. “In the end, we got a bunch of farmers involved along with some equipment dealers wanting to support our efforts.”

And that was the genesis of the South Louisiana Rail Facility, an LLC, which now has 156 paid members.

The plan was simple: just provide paddy rice to those wanting to buy it.

“We wanted to satisfy an existing market,” says Krielow. “It wasn’t a matter of reinventing the wheel. Mexico has been buying a tremendous amount of paddy rice from the United States for the past decade-plus. We’re close to Mexico and have the product they want.

“We wanted to sell them our paddy rice. What we didn’t have was a mode of transportation to get our rice to them. That’s where the idea of this facility was actually born.”

The farmers knew three things: Mexico imports more U.S. rice than anyone else; they have excess milling capacity and the majority of the rice they buy is rough, not milled.

The farmers began looking around “and LAFA (Louisiana Agricultural Financial Authority) had this industrial park with a rail system already established,” says Krielow. “There are two one-mile spurs off the main rail just waiting for someone to use it.

“With that set-up already there, all we needed was the elevator and holding capacity to utilize that existing park. The project cost – with the loading facility and elevator -- in the neighborhood of $4.5 million. If the rail had to be built, it would have been up to around $10 million.”

Pousson picks up the narrative. “Well, what was it going to take to make this work? At that time, (current Louisiana) Agriculture Commissioner Mike Strain came into office. He thought it was a promising idea but, at the time, had empty pockets and couldn’t help us.”

Learning curve

While the plan was simple, execution proved anything but, admits Pousson. “There was a long learning curve and we’re still on it. Eventually, we were able to secure enough funding for the state and, eventually, the USDA to know we were serious and warranted help. That was after doing feasibility studies, going through quality worries and jumping through other hoops.”

The LLC now has a 40-year lease on the facility with the state. There are four 40,000-bushel storage units on site. The benefit of that, says Pousson, “is it allows us to preposition our commodity as the railcars are delivered. For example, we just loaded up 40 railcars of rice to ship. The train gets here early Wednesday and the commodity and grade is already known on-site. If someone wants 5, 10, 20 cars, we can have the situation prepositioned ahead of schedule.

“We have a grading room so when the commodity arrives it’s graded (by a Federal Grain Inspection Service inspector). If it doesn’t meet the grade requested by the buyer, it’s turned away.

“We’ve been operational for a year and are slowly growing the business.”

The facility is a showplace – surely among the most modern, efficient, rough rice rail-loading facility in the United States. It can handle 25,000 bushels per hour from trucks, has a dual-truck pit that unloads a truck in four minutes. An overhead scale issues USDA-certified weights.

At the end of October, 2012, the first rail cars were loaded and headed to Mexico. Since then, the pace has picked up and the facility has been very busy.

Both Pousson and Krielow point to the help provided by Dwight Roberts, head of the U.S. Rice Producers Association, who has extensive contacts south of the border.

“Dwight has been instrumental in putting together a 160-car order,” says Pousson. “That wasn’t in place until the summer, so we’re tickled to have it. There’s another 130-car order that will go out in another month – a specialty rice.”

“This sort of effort really strikes at the heart of what USRPA is all about,” says Roberts. “We’re very pleased to have been a part of this. It’s so important to provide farmers with alternatives in the marketplace.”

Face-to-face

In promoting that, Roberts and rail facility representatives have traveled to Mexico and met with all the major buyers there. “We even met with large packers who don’t own mills there. Those visits were prompted by the quality debate that has been going on. It’s been a lot of fun to take them around and introduce them. They’ve learned to be diplomats.”

Those meetings, says Krielow, “have gone really well. We’ve been to several cities and mills, visited with millers of all sizes.

“The idea that they could talk directly to the guys actually growing the rice back in the States appealed to them. We explained the quality- control steps we take and how they could get what they want – no comingling, specific varieties, whatever.”

In return, the Mexican buyers have visited the rail facility and plan to come back.

“One of the largest buyers in Mexico will be visiting us soon,” says Krielow. “He’s interested in variety-specific rice knowing that rice here can be ready to ship quicker than rice grown in the Delta. Harvest here is about a month ahead of the Delta.”

Some of the Mexican customers are also entertaining the idea of contracting facility farmers to grow rice.

“One of the convenient things about the facility is the buyer can buy specific varieties,” says Roberts. “He can say ‘Look, I only want X variety – no mixing.’ That’s something that is going to become more common. More and more, the buyers are asking for a specific hybrid, a specific Clearfield, a specific conventional. The ability to provide that service is an added plus for the facility – they make it easy to IP.

“The buyers in Mexico have been pleasantly surprised at the quality they’ve received from the facility. A number of them have told me the rice is best they’ve seen for quite a while.”

What about expanding into shipping different commodities?

Krielow says that’s, “a definite possibility. We never tagged this as a purely rice-specific facility. Mexico imports a tremendous amount of corn and soybeans from the United States. Of course, south Louisiana farmland is primarily in rice – our soils don’t allow us to diversify as much as those in the Delta.

“One thing that most folks don’t know is that the facility isn’t limited to members-only rice. Anyone that wants to rent the facility is capable. That may be something that opens up opportunities in the future. We welcome the business.”

What’s “really great” about the facility, says Pousson, is it came about because “a bunch of farmers banded together. There’s power in numbers and much too often we kind of fragment instead of being cohesive. That didn’t happen here and we’re all going to benefit.

“There’s no school on how to do grants and capital outlays and the like. It hasn’t been a smooth ride. But we all rode it out and learned all kinds of things about how the government operates. Kudos to the administration (of Louisiana Gov. Bobby Jindal), to Commissioner Strain and everyone who helped us move it along.”